Island Real Estate in the Global Prime Sector WELCOME
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ISLAND REAL ESTATE IN THE GLOBAL PRIME SECTOR WELCOME... PRIVATE PARADISE n this issue of the Candy GPS Report, produced CONTENTS in partnership with Deutsche Asset & Wealth The gaze of the ultra-high-net-worth individual (UHNWI) has settled upon the remotest of Management and featuring exclusive research from trophy assets – the private island. Anna White debates the allure of this real estate market I PRIVATE PARADISE with the experts from Candy & Candy, Savills and Deutsche Asset & Wealth Management Savills, we focus on island real estate around the world. Surrounded by water and finite in number, islands The ultimate trophy asset for ultra-high-net-worth individuals is a private island encapsulate much of what is desired by ultra-high-net- worth individuals (UHNWIs). They are both exclusive and rare, where the best properties carry a significant THE WORLD OF ISLAND REAL ESTATE price premium over their mainland counterparts. Our research looks in depth at these markets and pinpoints We have identified four primary and distinct island markets the hot spots around the globe. We also look at the sustainability of these islands and the rise of private planes that are putting them within easy reach. THE A LIST ARCHIPELAGO We rank the world's top islands for UHNWI investment PLANE TRUTHS Nicholas Candy Private jet planes put the remotest corners of the CEO, Candy & Candy earth within reach for UHNWIs ISLAND MARKETS IN FOCUS Whether it is for business, leisure or investment there is an island to suit your requirements Steele Point, Tortola world away from city super flats or star, the qualities "remote" and "private" are to create luxury resorts, wealthy conservationists countryside retreats, the purchase of a priceless. Albeit a piece of Alaskan wilderness, for working in tandem with governments to preserve A GREEN AND PLEASANT ISLAND Aprivate island is an emotional one, driven the sole purpose of fishing, or a peaceful paradise in wildlife havens and high-net-worth individuals who by a desire to discover a new lifestyle. To the the South Pacific, the buyer has to balance deserted consider the urban playground to have become too established wealth of the Americas, Western but accessible, and untouched but connected, accessible and lost its glamour." We look at the sustainability of these island Europe, and Russia, the allure of such real estate while the price is determined by necessities such as According to private fortune experts, Wealth X, micro-economies is not new. "A private island is the ultimate trophy there has been a 4% rise in the size of the global asset," says Nicholas Candy, CEO, Candy & Candy. UHNW community, with a 5.4% jump in value. "But financial return is not the primary motivation. And of the $56 trillion pool of wealth held by the These buyers are seeking the ultimate hideaway and FOR THE SUPER RICH, THE world's super rich families, 25% of their investment FUTURE TRENDS a chance to shape their own world." qualities "remote" AND portfolio is dedicated to real estate – much or which There is a strong correlation between Northern "PRIVate" ARE priceless is return-generating for family offices and HNWIs. We look at the factors changing the shape of island Hemisphere-dwelling UHNWIs chasing the sun and While British entrepreneur Sir Richard Branson uses real estate markets buying in the Southern Hemisphere. The Seychelles, his private island as a family retreat, it is also a luxury in the Indian Ocean, or Florida Quays, off the running water, power, internet access and sanitation. resort. Dietrich Mateschitz, owner of the Fijian east coast of the US, for example, both appeal as However this intrepid investor is at the very top of a Laucala Island, has developed what is arguably the retreats for family and friends. complex, multi-layered island market place which is ultimate, exclusive island retreat for paying guests. Mallorca, Spain In some cases the purchase of a private island is inhabited by many different species of buyer. Multi-national hotel groups are now considering an eco-philanthropic gesture to preserve the natural "There are three main categories of buyer," says buying entire islands for development. Salman Madhi, Head of Key Clients Relationship The Candy GPS Report is published by Candy & Candy. All information correct at time of going to press. All rights reserved. Articles may not be reproduced without written permission from Candy & Candy. Opinions expressed are habitat of an island at risk and restrict public use. Pockets of new, emerging wealth are particularly those of the author and not Candy & Candy, Deutsche Asset & Wealth Management or Savills UK Ltd. While every care is taken in compiling the content, neither the publisher, nor Deutsche Asset & Wealth Management, nor Savills UK Such an investment is about lifestyle choice over Management, Deutsche Asset & Wealth prevalent in Asia. This burgeoning class of UHNWIs Ltd assumes responsibility for effects arising from this publication. Management. "Developers looking for opportunities financial return. For the super rich or a Hollywood is still young, fixated with urban investments, The material is for general information purposes only and has not been produced or reviewed by any Research Department in Deutsche Bank. Investment advice: The information and opinions expressed in this report do not constitute professional advice and should not be relied upon. Specific advice relating to your individual circumstances should be obtained. The value of investment can fall as well as rise and you might not get back the amount originally invested. 02 THE CANDY GPS REPORT 03 THE world OF ISLAND REAL estate particularly in London and New York. Although £100,000 per year, pension pots have been ravaged, as a private beach – the public can legally moor and The pinnacle of achievement is to own what is exclusive and rare, so for yields have dropped from double to single digits there is little return on bank savings accounts and visit a sandy shoreline. the world's wealthy an island property goes hand in hand with their luxury over the last few years these global cities offer rising property prices in the UK are deterring them "Governments are also piling into the private financial and political stability, luxury shopping with a from investing savings in domestic real estate. island market," says Charles Weston-Baker, Director, apartment in a prime city district. Yolande Barnes of Savills World Research "doing business" culture. The immature Asian market The affluent silver spender is buying up prime island Savills International Residential. Recession-ravaged looks at the global drivers and identifies four distinct island real estate markets therefore continues to put its money into property holiday homes, staying there for more than 182 days countries such as Greece have woken up to the in these high status urban locations. a year and saving on tax. In the main, tax efficiency, wave of revenue that could be generated by leasing "But while the top end of the private island market as a motivation to buy on an island, is diminishing. clusters of private islands. But investors must hen it comes to owning island real estate, remains largely uncharted territory for new Chinese In this era of transparency buying on Jersey, approach the purchase of a private island with buyers fall into two main categories money, they are starting to dip their toe in the water, Guernsey or Cyprus, is being replaced by other caution, and not be swept away with the romance Wof "Agglomerators" and "Dispersers". purchasing uber prime property on the party islands drivers, such as the pursuit of the island lifestyle. of owning their own mini kingdom. Access, running Dispersers are, by definition, difficult to define off the south coast of China, not to mention Ibiza water, sanitation and power suppy are all major because they seek independence and seclusion. and Sardinia," says Yolande Barnes, Director, Savills considerations," he says. Some will seek real estate in their home patch, World Research. The last 10 years were the decade of prime urban others will simply seek to get away from it all. For UHNWIs IN SEARCH OF Between 2009 and 2014 the number of super property investment, the next 10 years will see a those in this group buying islands, the lure is more yachts – defined as in excess of 24m – has tripled ADVENTURE SEEK OUT THE growing appetite for island lifestyle. The lower end likely to be an "invisible" island; difficult to reach, from 74 to 212. A luxury boat and a paradisical rarest opportunity of the luxury island market is set to explode as away from prying eyes and possibly undeveloped. destination, such as a private beach or resort on young money buys into ultra prime property and Agglomerators are those who seek real estate in an inhabited island or a wholly private island, are resorts on the world's most sociable islands. close proximity to others like themselves. When two complimentary investments, with the former But purchasing an island, or a slice of an island, is This spurt of activity will also drive demand at the it comes to islands, this is more likely to mean providing access. not without concerns. Even the reclusive billionaire top end of the market. The uber wealthy, in search developed and resort islands with a strong social During the recession, the fortunes of the world's wants relatively easy access to his new hideaway. of the ultimate adventure, will seek out the rarest aspect. Agglomerator islands can be either "visible" UHNWIs flourished, as they were well positioned Piracy worries those buying in the Seychelles opportunity, paying a premium for scarcity. Whether or "invisible". "Visible" islands are often in high to take advantage of unusual investments.